Hershey Vs. Pot Dealer in Trademark Suit

May 31, 2007

By LAURA E. DAVIS

In what experts call one of the strangest trademark lawsuits in recent memory, chocolate giant Hershey Co. is suing a California marijuana dealer for ripping off the company's name by selling marijuana-laced knockoffs.

The tainted treats, with names like Rasta Reese's, Keef Kat, Puff-A-Mint Pattie and Stoney Rancher, were sold to California state-authorized medicinal marijuana shops, according to police. Stickers on the treats' packaging resembled labels of Hershey's Reese's Peanut Cups, Kit Kat, York Peppermint Pattie and Jolly Rancher.

Intellectual property lawyers who spoke to ABC News said the chocolate company might have a strong case under current trademark laws.

"Does the customer really believe Hershey is making marijuana-laced candy? I don't think so," said Robin Feldman, a professor who teaches intellectual property law at the University of California at San Francisco's law school.

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"But now you're associating illegal drugs with the Hershey mark. You're thinking about bad things, illegal things, things that will harm your body when you think of the Hershey mark, and that is terribly damaging to the company and its mark."

Companies need to be careful to not let their marks be associated with goods the public considers negative, said Stanford Law School professor Mark Lemley.

"Maybe you'll use my famous mark on bad-quality goods," Lemley told ABC News' Law & Justice Unit. "Imagine Disney-brand pornography. No one's going to think Disney's actually selling porn, but when they think of Disney they'll have that association."

Already Serving Time for Dealing Pot

The federal civil lawsuit was served on Kenneth Affolter, 40, of Lafayette, Calif., on May 15 while he was in county jail awaiting transfer to state prison, making him a unique defendant in a trademark case.

Trademark suits are rarely served to people in prison, legal experts told ABC News.

"I can't remember seeing a trademark infringement suit brought against someone behind bars," said Jim Crowne, the communications director of the American Intellectual Property Law Association. "That's quite unusual. Felons behind bars are not usually defendants in trademark infringement cases."

Molly Van Houweling, an assistant professor of law at the University of California at Berkeley's law school, called the case unusual.

"Trademark law usually involves disputes between potential competitors," she said. "These seem to be goods marketed in different channels. You do not find these products marketed next to each other on store shelves."

Affolter's lawyer, David M. Michael, said he was negotiating with Hershey. Both Hershey and its lawyers declined to comment for this story.

DEA Raid on Beyond Bomb

The Drug Enforcement Administration and a laundry list of local law enforcement agencies raided the Oakland and Emeryville, Calif., warehouses of Affolter's company, Beyond Bomb, as well as Affolter's home in Lafayette, Calif., in March 2006. Officials seized thousands of marijuana plants, hundreds of packages and bottles of the marijuana-laced candies and soft drinks, three guns and a large amount of cash, according to a DEA statement. The San Francisco Chronicle reported the cash seizure at $189,000.

Affolter and 11 other people associated with the business were arrested, and Affolter pleaded guilty to conspiracy to manufacture and distribute marijuana plants in September. He was sentenced to 70 months in prison on March 2, 2007.